FHA Flip?

Question

How does flipping a FHA home after 90days work? do I need to pay off the loan first before selling or can I sell and pay it off?

Nathan Emmert · Answer

Chris, the 90 days you're referencing is generally on the buyer's side.  A buyer can not buy a house and pay more than 20% more than the previous sale price if the previous sale has occurred within 90 days.  This tends to affect flippers who market to FHA buyers as it can increase their hold times.

J Scott · Answer

I assume you mean that you purchased a home with FHA financing and now you want to resell it?

Assuming that's the case, FHA will generally require you to occupy the property as your primary residence for 1 year before you can sell.  Under certain situations ("special circumstances") you can get around the 1-year rule, but you must have had the intention of living there for 1-year when the property was purchased.

Unless it's clear that you have a special circumstance where you have to move after 90 days, I would recommend speaking with a good real estate attorney before deciding to sell.

All that said, when you sell, the proceeds from the sale are generally used to pay off the loan -- if the sale proceeds don't cover the full loan amount, you'll need to provide the difference out-of-pocket.

J Scott · Answer

Yes, it's about intent.  The problem I see for you is that you posted the following on a public Internet forum:

If anyone ever investigated a sale you did prior to the 1 year requirement, this post would certainly imply that you had an intent to defraud FHA.

Be careful out there...

Danny Day · Answer

Christopher Puletasi, as always speak with an attorney. I am not one and I do not know the legalities of this. I'm just relaying what I've heard from a lender here in town.

Christopher P. · Answer

Thanks Danny,

What you just said, really build my confidence to finance with FHA. This is the answer I was looking for. It's all about Intent which really makes a lot of sense and it's honest.

Thanks again

Danny Day · Answer

I spoke with a lender about this on the buyers side. When buying a home with an FHA loan, and you decide to sell within the 1st year, this is not illegal (from what a lender told me, not an attorney). He told me its all about INTENT. You must have intent to occupy the property as your homestead , and if you decide to sell then you can sell. If you can prove you moved in, lived there, and then sold then he said it isnt a problem. He also told me where people get into trouble is buying with FHA and renting out, the best way to get caught there is doing an address change the 1st month of your loan. Raises red flags.

Christopher P. · Answer

Thanks,

Just what I needed to know.

FHA Flip?

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